Consolidation

1. IFRS 10 defines them as the financial statements of a group in which the assets, liabilities,
equity, income, expenses and cash flows of the parent and its subsidiaries are presented as
those of a single economic unit.
a. Consolidated financial statements
b. Separate financial statements
c. Group financial statements
d. Combined financial statements

2. Which of the following statements concerning the preparation of consolidated financial

statements by a parent is incorrect?
a. The parent corporation, as a general rule, shall present consolidated financial statements
including all its subsidiaries regardless of its industry or dissimilarity.
b. A subsidiary shall be excluded by a parent from the consolidation simply because the
investor is a venture capital organization, mutual fund, unit trust or similar entity.
c. An investment entity, which (1) obtains funds from one or more investors, (2) commits to
its investors that its business is to invest funds solely for returns/capital appreciation, and
(3) measures and evaluates the performance substantially all of its investment on a fair
value basis is exempted from preparing consolidated financial statements.
d. A parent corporation (1) which is a wholly-owned or partially-owned subsidiary, (2) whose
debt or equity instrument are not publicly traded, (3) which is not in the process of initial
public offering, and (4) when its immediate or ultimate parent produces consolidated
financial statements available for public use is exempted from presenting consolidated
financial statements.

3. Under IFRS 10, parent corporation is the entity that controls one or more entities. How does
IFRS 10 define control?
a. An investor controls an investee when it is exposed, or has right to variable return
from the investment with the investee and has the ability to affect those returns
through the power over the investee.
b. An investor controls an investee when it has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
c. An investor controls an investee when it has the ability to influence the financial and
operating policies of an entity so as to obtain benefits from its activities.
d. An investor controls an investee when it owns more than 50% of all the outstanding capital
stocks, whether common or preferred.

4. Under IFRS 10, it refers to the term used to describe the ownership of the largest block of
voting rights in a situation where the remaining rights are widely dispersed even if it is less
than the majority interest thereby requiring the holder of such interest to prepare consolidated
financial statements?
 a. De jure control
b. De facto control
c. Legal control
d. Nominal control

5. Parent Corporation has 51% interest in listed entity Sub Inc. Sub is a highly-leveraged and
started making losses. Parent decided to sell 2% to an investment bank. The post-sale
structure shows that Parent Corp. has only 49% interest, investment bank has 2% interest
and the remaining 49% interest owned by many shareholders other than the investment
bank each with less than 1% of votes and there is no arrangement among them to vote
collectively. Upon the sale, Parent Corporation can easily reacquire controlling interest in
Sub by buying shares in the market and expects to continue managing Sub through election
of directors in Sub’s general meeting. Sub Inc. is listed with deep and liquid market for
shares. Is the Parent still required to consolidated Sub Inc. in its consolidated financial
statements despite less than majority ownership?
a. No because it has no control considering it only has 49% interest in Sub.
b. Yes because there is de facto control on the part of Parent Corp. over the relevant
activities of Sub Inc.
c. No because control is not shown by the relevant facts.
d. Yes even if the other shareholders will connive to gain control.

6. An investee’s only business activity is to purchase receivables and service them on a day-to-
day basis. Servicing involves collection and passing on of principal and interest payments.
Upon default, the investee automatically puts the receivable to investor X as agreed separately
in a put agreement with investor X. Is Investor X required to consolidate Investee in its
consolidated financial statements?
a. Yes because X controls the investee’s relevant activity that is managing the
receivables upon default which significantly affects the investee’s returns.
b. No because there is no statement as regards to majority ownership of stocks.
c. Yes but only if X owns 51% or more of voting stocks of investee.
d. No because there is no link of power over the investee to the exposure/right to variable
returns of investment.

7. How shall the parent corporation present the Noncontrolling Interest (NCI) in the Consolidated
Statement of Financial Position?
a. It shall be presented within Consolidated Stockholders’ Equity, separately from the
equity of the owners of the parent.
b. It shall be presented as non-current liability.
c. It shall be presented as non-current asset.
d. It shall be presented as contract-equity account like treasure shares and subscription
receivable.

8. Which of the following income items shall affect both CNI to Parent/(CONSORE) and
NCINI/(NCINAS)?
 a. Gain on bargain purchase arising from business combination.
b. Unrealized/realized income/expense arising from transactions between two
subsidiaries owned by the same parent.
c. Unrealized/realized income/expense arising from downstream transactions or from parent
to subsidiary.
d. Impairment loss of goodwill from business combination initially measured using
proportionate share of fair value of net asset acquired.

9. Which of the following income items shall affect CNI to Parent/(CONSORE) only but not
NCINI/(NCINAS)?
a. Amortization of difference between the fair value and book value of the assets and
liabilities of the subsidiary.
b. Unrealized/realized income/expense arising from upstream transactions or from subsidiary
to parent.
c. Impairment loss of goodwill from business combination initially measured using fair value
of NCI.
d. Dividend income of parent coming from subsidiary.

10. IAS 27 as amended defines Separate Financial Statements as those presented by a parent
or an investor with joint control of, or significant influence over, in addition to its
consolidated financial statements. Under IAS 27 as amended, Investment in Subsidiary
shall be accounted for by the parent in its separate financial statements using
a. Equity Method under IAS 28
b. Cost Method
c. Fair value model under IFRS 9
d. Any of the above

11. Which of the following statements concerning the requirement of IAS 27 for preparation of
Separate Financial Statements is incorrect?
a. IAS 27 as amended mandates the entities which shall present separate financial
statements.
b. IAS 27 does not mandate or require which parent corporation should produce separate
financial statements but it shall depend on the laws or rules of a particular jurisdiction.
c. Separate financial statements need not be appended to, or accompany, the consolidated
financial statements.
d. A parent entity that is exempted from preparing consolidated financial statements in
accordance with IFRS 10 provision may present separate financial statements as its only
financial statements.
e. When the entity elects either cost method or fair value model, an entity shall recognize a
dividend from a subsidiary, a joint venture or an associate in profit or loss in its separate
financial statements when its right to receive the dividend is established but in case of
equity method, it shall be considered as deduction from investment account.
12. When the parent corporation elects to account its investments in subsidiaries, associates or
jointly controlled entities in its separate financial statements using cost model or fair value
model, how shall it recognize its dividends from a subsidiary, joint venture or associate?
a. The dividends from a subsidiary, joint venture or associate shall be recognized as
dividend income as part of profit or loss of separate statement of comprehensive
income when its right to receive dividend is established.
b. The dividends from a subsidiary, joint venture or associate shall be recognized as deduction
from investment account when its right to receive dividend is established.
c. The dividends from a subsidiary, joint venture or associate shall be recognized as dividend
income as part of other comprehensive income of separate statement of comprehensive
income when its right to receive dividend is established.
d. The dividends from a subsidiary, joint venture or associate shall be eliminated through
proportionate consolidation in the separate statement of comprehensive income.

Joint Arrangement

13. When the parent corporation elects to account its investments in subsidiaries, associates or
jointly controlled entities in its separate financial statements using equity method, how
shall it recognize its dividends from a subsidiary, joint venture or associate?
a. The dividends from a subsidiary, joint venture or associate shall be recognized as dividend
income as part of profit or loss of separate statement of comprehensive income when its
right to receive dividend is established.
b. The dividends from a subsidiary, joint venture or associate shall be recognized as
deduction from investment account when its right to receive dividend is established.
c. The dividends from a subsidiary, joint venture or associate shall be recognized as dividend
income as part of other comprehensive income of separate statement of comprehensive
income when its right to receive dividend is established.
d. The dividends from a subsidiary, joint venture or associate shall be eliminated through
proportionate consolidation in the separate statement of comprehensive income.

14. It is characterized by a contractual arrangement whereby two or more parties have joint
control of the arrangement.
a. Joint arrangement
b. Joint operation
c. Joint venture
d. Jointly controlled asset

15. It is the contractually agreed sharing of control of an arrangement which exists only when
decisions about relevant activities require unanimous consent of the parties sharing control.
a. Control
b. Significant influence
c. Joint control
d. Solidary control
16. It is a type of joint arrangement whereby the parties that have joint control of the arrangement
have right to the total assets and obligations for the total liabilities relating to the arrangement.
a. Joint venture
b. Jointly controlled asset
c. Joint operation
d. Joint business

17. It is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the arrangement.
a. Joint venture
b. Jointly controlled asset
c. Joint operation
d. Joint business

18. What is the classification of the joint arrangement when the arrangement is structured
without a separate vehicle such as when the rights of each party to the total assets and
obligations for total liabilities relating to the arrangement are clearly established?
a. It shall be classified as joint venture.
b. It shall be classified as joint operation.
c. Neither joint venture nor joint operation.
d. It can be either a joint operation or joint venture depending on the company policy of the
parties to the joint arrangement.

19. What is the classification of the joint arrangement when the assets and liabilities relating to the
arrangement are held by a separate vehicle or when the arrangement is established with a
separate vehicle?
a. It shall be classified as joint venture.
b. It shall be classified as joint operation.
c. Neither joint venture nor joint operation.
d. It can be either a joint operation or joint venture depending on the legal form of the
separate vehicle, terms of the contractual arrangement or other relevant facts and
circumstances.

20. Under IFRS 11, how shall the joint venturer account for its Investment in Joint Venture?
a. Equity method
b. Cost method
c. Fair value method under IFRS 9
d. Proportionate consolidation

21. Under IFRS 11, as an exception to the general rule of mandatory equity method accounting for
Investment in Joint Venture, what is alternative treatment available to joint venturer for an
investment in joint venture held or is held indirectly through an entity that is a venture capital
organization, mutual trust fund, unit trust and similar entities including insurance-liked fund?
a. It may elect to measure the investment in joint venture at fair value through profit or
loss.
 b. It may elect to measure the investment in joint venture at fair value through other
comprehensive income
c. It may elect to measure the investment in joint venture at cost method.
d. It may elect to measure the investment in joint venture at proportionate consolidation.

22. Under IFRS for SMEs, how shall the joint venturer account for its Investment in Joint Venture?
a. Equity method
b. Cost method
c. Fair value method under IFRS 9
d. Any of the above

23. Under IFRS for SME, which of the following statements is false?
a. Joint control over an entity can be gained or lost without a change in absolute or
relative ownership levels.
b. In determining whether two or more entities jointly control another entity, the
existence and effect of potential voting rights that they hold that are currently
exercisable or convertible are considered.
c. An entity considers the existence and effect of potential voting rights held by other
parties that are currently exercisable or convertible when determining whether it
together with its co-venturers jointly controls another entity.
d. In determining whether an entity and its co-venturers jointly control another
entity, only present ownership interests are considered. The possible exercise or
conversions of potential voting rights are not considered.

24. Under IFRS 11, how shall the joint operator account for its interest in a joint operation?
a. The joint operator shall account for its interest under Equity Method.
b. The joint operator shall account for its interest under Cost Method.
c. The joint operator shall account for its interest using proportionate consolidation.
d. The joint operator shall account for its interest by recognizing its assets, its liabilities,
its revenue, its expenses and its shares in the jointly controlled assets, jointly incurred
liabilities, jointly earned revenue and jointly incurred expenses in accordance with
the contractual arrangement.

Corporate Liquidation

25. It refers to the extinguishment of the juridical personality of a corporation for causes
expressly provided by law.
a. Corporate liquidation
b. Corporate dissolution
c. Corporate rehabilitation
d. Corporate termination
 26. It refers to process of winding up the affairs of the corporation by settling its corporate
debts and distributing the remainder to the stockholders.
a. Corporate liquidation
b. Corporate dissolution
c. Corporate rehabilitation
d. Corporate termination

27. After the date of corporate dissolution, what is the maximum period allowed by law to a
dissolved corporation to complete its liquidation process?
a. 1 year
b. 2 years
c. 3 years
d. 4 years

28. What is the term used when the total stockholders’ equity has debit balance?
a. Deficit
b. Deficiency
c. Delinquency
d. Default

29. Which of the following unsecured debts with priority shall be paid first during corporate
liquidation?
a. Corporate liabilities to employees
b. Obligations arising from corporate crime
c. Corporate liabilities arising from taxes to government
d. Obligations arising from corporate tort or quasi-delict

30. Which of the following creditors can always fully recover its claim from a dissolved
corporation during corporate liquidation?
a. Fully secured creditors
b. Partially secured creditors
c. Unsecured creditors with priority
d. Unsecured creditors without priority

31. Which of the following items is not being considered in the computation of recovery
percentage of unsecured creditors without priority?
a. Assets reserved for fully secured credits
b. Assets reserved for partially secured credits
c. Unsecured portion of partially secured liabilities
d. Assets not used as collateral for any liability

Job Order

1. Which of the following statements concerning the comparison among actual costing,
normal costing and standard costing is correct?
 a. Actual costing system values manufactured products with the actual material costs,
actual direct labor costs, and actual manufacturing overhead costs.
b. Normal costing system values manufactured products with the actual material costs,
actual direct labor costs and manufacturing overhead based on a predetermined
manufacturing overhead rate with the possible over/under application of factory
overhead to be closed to costs of goods sold only if insignificant or to be closed prorated
to cost of goods sold, work in process and finished goods inventory if significant.
c. Standard costing system values manufactured goods with predetermined material cost,
predetermined direct labor cost, and a predetermined manufacturing overhead costs
with the possible over/under application of factory overhead to be closed to costs of
goods sold only if insignificant or to be closed prorated to cost of goods sold, work in
process and finished goods inventory if significant.
d. All of the above.

2. Which of the following instances will decrease the cost of goods manufactured for the
period ended?
a. Increase in the finished goods during the period.
b. Decrease in the direct labor cost from prior year.
c. Increase in the work in process inventory during the period.
d. Decrease in the raw materials inventory during the period.

3. When shall the job order costing be used instead of process costing?
a. When the production process performs standardized or uniform procedures.
b. When the company performs a very long production runs.
c. When the company intends to use it for billing customers.
d. When the company produces low-value and homogeneous products.

4. Which of the following costs shall be considered prime cost, conversion cost and product
cost at the same time?
a. Acquisition price of the main material of the product.
b. Depreciation of the machinery used to manufacture the product.
c. Salary of the factory supervision, factory janitor and factory security guard.
d. Employee benefits of the factory machine operator.

5. Which of the following costs shall be considered prime cost but not conversion cost?
a. Acquisition price of the main material of the product.
b. Depreciation of the machinery used to manufacture the product.
c. Salary of the factory supervision, factory janitor and factory security guard.
d. Employee benefits of the factory machine operator.

6. Which of the following costs shall be considered conversion cost but not prime cost?
a. Acquisition price of the main material of the product.
b. Depreciation of the administrative building.
c. Salary of the factory supervisor, factory janitor and factory security guard.
 d. Employee benefits of the factory machine operator.
7. Which of the following costs shall be considered as product cost instead of period cost?
a. Salary of the inventory accountant.
b. Freight out, warranty cost and sales commission.
c. Storage cost of work-in-process inventory
d. Costs of abnormal waste

8. Which of the following costs shall be considered as period cost instead of product cost?
a. Finance cost on inventory loan and foreign exchange differences arising from
purchases
b. Freight-in and insurance while in transit of the raw materials
c. Non-creditable import duties and irrecoverable value added tax
d. Cost of indirect material used and indirect labor incurred

9. Which of the following statements concerning spoilage in a job-order costing is correct?

a. The cost of abnormal spoilage is recorded as period cost or expense.
b. When normal spoilage occurs because of the specification of a particular job, cost of
normal loss shall be capitalized to that specific job reduced by the current disposal
value/ net realizable value of the spoiled units.
c. When normal spoilage is a characteristic of a given production cycle, the cost of normal
loss is not charged to a specific job but will be closed to manufacturing overhead
control account.
d. All of the above.

10. Which of the following statements concerning rework costs in a job-order costing is
correct?
a. If the normal rework cost is attributable to a specific job, it shall be capitalized to that
particular job.
b. It the normal rework cost is common to all jobs, it shall be debited to manufacturing
overhead control account.
c. If the rework cost is abnormal, it shall be recorded as period cost or expense.
d. All of the above.

11. Which of the following statements concerning scrap in a job-order costing is correct?
a. If the scrap is insignificant, the realizable value of scrap is recognized as revenue at the
time it is sold.
b. If the scrap is insignificant but traceable to the job that yielded the scrap, the net
realizable value of scrap shall be recorded as a deduction from cost of that specific
product.
c. If the scrap is insignificant but common to all jobs, the net realizable value of scrap
shall be credited to manufacturing overhead control.
 d. If the scrap is significant, the net realizable value shall be capitalized as inventory of
scrap with the credit going to specific job if traceable to a particular job or
manufacturing overhead control if common to all jobs.
e. All of the above.

Process Costing

1.When shall the process costing be used instead of job order costing?
e. When the production process performs standardized or uniform procedures.
f. When the company performs a very short production runs that is based on customer
specifications.
g. When the company intends to use it for billing customers.
h. When the company produces high-value and heterogeneous products.

2. What is the reason for the difference between the allocated cost computed using FIFO-process
costing and average-process costing?
a. Cost per unit under average costing is computed by dividing the sum of cost of work-in-
process inventory and total manufacturing costs by the equivalent unit of production while
cost per unit under FIFO costing is computed by dividing total manufacturing cost by
equivalent unit of production.
b. Average costing assumes that all units are started during the period while FIFO costing
considers the percentage of completion of the beginning inventory.
c. Computation of units completed under average pertains to costs of units completed only
while computation of units completed under FIFO considers costs of beginning inventory,
costs assigned to equivalent unit of production added to beginning inventory and costs of
units started and completed.
d. All of the above.

3. If the spoilage in process costing is considered to be continuous, which of the following

statements is correct?
a. The cost assigned to abnormal loss shall be treated as period cost or expense.
b. The cost assigned to normal loss shall be allocated to units completed, work-in-process
ending inventory and abnormal loss.
c. The abnormal loss shall be given 100% equivalent unit of production while normal loss
shall not be given an equivalent unit of production to automatically allocate the cost of
normal loss to units completed, work-in-process ending inventory and abnormal loss by
increasing the cost per unit.
d. All of the above.

4. If the spoilage in process costing is considered discrete because there is inspection point, which
of the following statements is correct?
a. The cost assigned to abnormal loss shall be treated as period cost or expense.
b. The cost assigned to normal loss shall be allocated to either (1) units completed only or (2)
prorated to units completed and work-in-process ending inventory based on equivalent
units of production, depending on where those normal losses were discovered.
 c. The normal or abnormal loss shall be given or not given equivalent unit of production
depending on the stage of inspection point and stage of adding the cost component.
d. All of the above

5. When will the average process costing method produce the same cost of goods manufactured
as the first in first out process costing method?
a. When materials are added 100% at the end of the process.
b. When materials are added 100% at the beginning of the process.
c. When the beginning work in process inventory and ending work in process inventory are
equal.
d. When there is no beginning work in process inventory.

Backflush Costing

1. Which of the following costs shall be considered as period cost instead of product cost?
a. Finance cost on inventory loan and foreign exchange differences arising from
purchases
b. Freight-in and insurance while in transit of the raw materials
c. Non-creditable import duties and irrecoverable value added tax
d. Cost of indirect material used and indirect labor incurred

2. It is an inventory strategy a company employs to increase efficiency and decrease waste by

receiving and producing goods as they are needed in the production process, thereby
reducing inventory costs.
a. Just In Time Inventory System
b. Min-max inventory system
c. Pareto/80-20 inventory rule
d. ABC inventory system

3. It is a product costing system generally used in just-in-time inventory environment. This

costing system delays the costing process until the production of goods is completed by
eliminating the detailed tracking of cost throughout the production system and preparing
journal entries only at trigger points.
a. Backflush costing
b. Standard costing
c. Normal costing
d. Traditional costing

4. Which of the following statements of service department costs allocation pertains to direct
method?
a. This method allocates each service department’s total costs directly to the
production departments, and ignores the fact that service departments may also
provide services to other service departments.
 b. This method is also called sequential method that allocates the costs of some service
departments to other service departments, but once a service department’s costs have
been allocated, no subsequent costs are allocated back to it.
c. This method is the most accurate of the three methods for allocating service department
costs, because it recognizes reciprocal services among service departments. It is also
the most complicated method, because it requires solving a set of simultaneous linear
equations.
d. None of the above.

5. Under Just-in-Time Inventory System and Backflush Costing, what costing method is
ideally employed?
a. Normal costing
b. Actual costing
c. Standard costing
d. Budgeted costing

Joint Cost Allocation

1. This method of allocating joint manufacturing costs to main/joint products allocates joint
costs on the basis of estimated sales value at split off of a given joint product relative to the
sales value at split off of total joint production?
a. Market value at split-off approach
b. Hypothetical market value or approximated net realizable value approach
c. Average unit or production output method
d. Weighted average method

2. For products that need further processing, this method is more suitable because it takes into
account, the additional costs needed to further process and sell the joint products. Under
this method of allocating manufacturing costs to man products, joint cost is allocated to
products using the following the net realizable value ratio of the products.
a. Market value at split-off approach
b. Hypothetical market value or approximated net realizable value approach
c. Average unit or production output method
d. Weighted average method

3. This method of allocating joint manufacturing costs to main/joint products allocates joint
costs based on number of units or physical quantity such as weight, volume or length of
each product relative to total production.
a. Market value at split-off approach
b. Hypothetical market value or approximated net realizable value approach
c. Average unit or production output method
d. Weighted average method
 4. This method of allocating joint manufacturing costs to main products allocates joint cost
based using the weight factors to include such diverse elements as amount of material used,
difficulty to manufacture, time consumed, difference in type of labor used, and size of unit
for determination of cost allocation ratio.
a. Market value at split-off approach
b. Hypothetical market value or approximated net realizable value approach
c. Average unit or production output method
d. Weighted average method

5. If the net realizable value of the by-product of a joint production process is significant, how
shall it be accounted for?
a. The net realizable value of the by-product shall be recorded as deduction from the
total joint manufacturing cost thereby reducing the cost of the main products also
known as replacement cost method.
b. The net realizable value of the by-product shall be recorded as deduction from the net
sales of the main product.
c. The net realizable value of the by-product shall be recorded as deduction from the cost
of sales of the main product.
d. The net realizable value of the by-product shall be recorded as other income.

Government Accounting

1. What is the title of the revised government accounting system for national government
agencies which will be effective starting January 1, 2016?
a. Government Accounting Manual (GAM)
b. New Government Accounting System (NGAS)
c. Philippine Government Accounting System (PGAS)
d. National Government Accounting Manual (NGAM)

2. Under Article IX-D Section 2 of the 1987 Constitution of the Republic of the Philippines, it
shall have the exclusive authority, subject to the limitations in this Article, to define the
scope of its audit and examination, establish the techniques and methods required therefore,
and promulgate accounting and auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures, or uses of government funds and properties. It shall also be
responsible to keep the general accounts of the Government and, for such period as may be
provided by law, preserve the vouchers and other supporting papers pertaining thereto.
a. Commission on Audit
b. Civil Service Commission
c. Commission on Election
d. Commission on Human Rights

3. The Government Accounting Manual aims to update the following, except

 a. standards, policies, guidelines and procedures in accounting for government funds and
property
b. coding structure and accounts
c. accounting books, registries, records, forms, reports and financial statements.
d. scope and objectives of audit.

4. It encompasses the processes of analyzing, recording, classifying, summarizing and

communicating all transactions involving the receipt and disposition of government funds and
property, and interpreting the results thereof.
a. Government auditing
b. Government reporting
c. Government accounting
d. Government analyzing

5. It refers to the is the financial plan of a government for a given period, usually for a fiscal year,
which shows what its resources are, and how they will be generated 3 and used over the fiscal
period.
a. Government budget
b. Government financial position
c. Government financial statements
d. Government financial performance

6. It refers to the step in the government budgetary process wherein the President, through the
assistance of the Department of Budget and Management, shall prepare and submit to the
Congress a budget of expenditures and sources of financing, including receipts from existing
and proposed revenue measures.
a. Budget Preparation
b. Budget Legislation or Authorization
c. Budget Execution
d. Budget Accountability

7. It refers to the step in the government budgetary process which involves the enactment by the
Congress of the General Appropriation Act (GAA) based on the budget submitted by the
President which cannot be increased by the Congress. The initiative for the enactment of the
appropriation law shall come from the House of Representatives.
a. Budget Preparation
b. Budget Legislation or Authorization
c. Budget Execution
d. Budget Accountability

8. It refers to the step in the government budgetary process which involves that implementation
of the general appropriation act which includes the release of revenue allotment under the
supervision of Department of Budget and Management.
a. Budget Preparation
 b. Budget Legislation or Authorization
c. Budget Execution
d. Budget Accountability

9. It refers to the step in the government budgetary process which involves the submission of
proper documentary reports by responsible officer, liquidation of expenditures and audit
conducted by Commission on Audit to ensure the public funds are spent in accordance with
the appropriation act.
a. Budget Preparation
b. Budget Legislation or Authorization
c. Budget Execution
d. Budget Accountability

10. Under the Government Accounting Manual (GAM), the financial reporting system of the
Philippine government consists of accounting system on accrual basis and budget reporting
system on budget basis under the statutory responsibility of the National Government Agencies
(NGAs), Bureau of the Treasury (BTr), Department of Budget and Management (DBM), and
the Commission on Audit (COA). Which of the following is incorrect under the Government
Accounting Manual?
a. Each entity of the National Government (NG) maintains complete set of accounting books
by fund cluster which is reconciled with the records of cash transactions maintained by the
BTr.
b. The BTr accounts for the cash, public debt and related transactions of the NG.
c. Each entity maintains budget registries which are reconciled with the budget records
maintained by the DBM and the Government Accountancy Sector (GAS), COA.
d. Each entity shall maintain Regular Agency (RA) Books and National Government
(NG) Books for the recording of its transactions.

11. The General Accounting Manual enumerates the following components of the General Purpose
Financial Statements of National Government Agencies, except
a. Statement of Financial Position
b. Statement of Financial Performance
c. Statement of Retained Earnings
d. Statement of Cash Flows
e. Statement of Changes in Net Assets/Equity
f. Statement of Comparison of Budget and Actual Amounts
g. Notes to the Financial Statements, comprising a summary of significant accounting policies
and other explanatory notes.

12. The books of accounts of National Government Agencies under the GAM shall consist of the
following, except
a. General Journal
b. Cash Receipts Journal
c. Cash Disbursement Journal
d. Regular Agency and National Government Books
 e. Check Disbursements Journal
f. General Ledgers
g. Subsidiary Ledgers

13. The registries of National Government Agencies under the GAM shall consist of the following,
except
a. Registries of Revenue and Other Receipts. (RROR)
b. Registry of Appropriations and Allotments. (RAPAL)
c. Registries of Allotments, Obligations and Disbursements (RAOD)
d. Registries of Budget, Utilization and Disbursements (RBUD)
e. Registries of Priority Development Assistant Program (RPDAP)

14. It refers to the registry maintained by NGA unit to monitor the revenue and other receipts
estimated/budgeted, collected and remitted/deposited.
a. Registries of Revenue and Other Receipts. (RROR)
b. Registry of Appropriations and Allotments. (RAPAL)
c. Registries of Allotments, Obligations and Disbursements (RAOD)
d. Registries of Budget, Utilization and Disbursements (RBUD)

15. It refers to registry maintained by NGA unit to show the original, supplemental and final budget
for the year and all allotments received charged against the corresponding appropriation.
a. Registries of Revenue and Other Receipts. (RROR)
b. Registry of Appropriations and Allotments. (RAPAL)
c. Registries of Allotments, Obligations and Disbursements (RAOD)
d. Registries of Budget, Utilization and Disbursements (RBUD)

16. It refers to registry maintained by NGA unit to show the allotments received for the year,
obligations incurred against the corresponding allotment and the actual disbursements made.
a. Registries of Revenue and Other Receipts. (RROR)
b. Registry of Appropriations and Allotments. (RAPAL)
c. Registries of Allotments, Obligations and Disbursements (RAOD)
d. Registries of Budget, Utilization and Disbursements (RBUD)

17. It refers to registry maintained by NGA unit to record the approved special budget and the
corresponding utilizations and disbursements charged to retained income authorized under the
law and other retained income collection of a national government agency with similar
authority.
a. Registries of Revenue and Other Receipts. (RROR)
b. Registry of Appropriations and Allotments. (RAPAL)
c. Registries of Allotments, Obligations and Disbursements (RAOD)
d. Registries of Budget, Utilization and Disbursements (RBUD)

18. The following are the classifications of different RAPAL, RAOD and RBUD, except
a. RAPAL/RAOD/RBUD – Personal Services
 b. RAPAL/RAOD/RBUD – Maintenance and Other Operating Expenses
c. RAPAL/RAOD/RBUD – Financial Expenses
d. RAPAL/RAOD/RBUD – Capital Outlays
e. RAPAL/RAOD/RBUD – Noncash Expenses

Foreign Currency

1. Under PAS 21, which of the following statements pertains to functional currency?
a. It refers to the currency of the primary economic environment in which the entity
operates.
b. It refers to the currency in which the financial statements are presented.
c. It refers to the currency other than the functional currency of the entity.
d. It refers to the type of currency in a given jurisdiction which a creditor may be compelled
to accept.

2. Under PAS 21, monetary items are cash or elements of financial statements which are
receivable or payable in a fixed amount of cash. Which of the following is a monetary item?
a. Sales
b. Income tax payable
c. Unearned revenue
d. Inventory

3. Which of the following is a nonmonetary item?

a. Prepaid asset
b. Loan receivable
c. Accounts payable
d. Interest payable

4. Under PAS 21, what is the initial measurement of foreign currency denominated transaction?
a. Both monetary and nonmonetary items are measurement initially at transaction or
historical rate.
b. Monetary items are measured at closing rate while nonmonetary items are measured at
transaction rate.
c. Monetary items are measured at transaction rate while nonmonetary items are measured at
closing rate.
d. Both monetary and nonmonetary items are measurement initially at closing rate.

5. Under PAS 21, what is the subsequent measurement of nonmonetary items?

a. Closing rate
b. Transaction rate
c. Average rate
d. Monthly rate

6. Under PAS 21, what is the subsequent measurement of monetary items?

 a. Closing rate
b. Transaction rate
c. Average rate
d. Monthly rate

7. Under PAS 21, what is the subsequent measurement of nonmonetary items subsequently
measured at fair value?
a. Closing rate
b. Transaction rate
c. Exchange rate at the date when the fair value was determined
d. Average rate

8. PAS 21 provides that exchange differences/(gain/loss) arising on the settlement or translating

foreign currency transaction shall be recognized in
a. Profit or loss
b. Other comprehensive income
c. Share premium
d. Retained earnings

9. Which of the following items will result to foreign currency transaction gain/loss due to
settlement or translation?
e. Foreign currency denominated income statement accounts such as revenue, income,
expense or loss.
f. Foreign currency denominated non-monetary assets such as inventory, PPE, intangible
asset or prepaid asset.
g. Foreign currency denominated monetary items such as accounts payable, accounts
receivable, notes payable, loans receivable or interest payable.
h. Foreign currency denominated non-monetary liabilities such as unearned revenue,
warranty liability, premium liability and deferred tax liability.
i. Foreign currency denominated equity accounts such as ordinary shares, preference shares,
treasury shares and share premium.

10. Under PAS 21, when there is a change in the entity’s functional currency, how shall the entity
apply the translation procedures applicable to the new functional currency?
a. It shall be applied prospectively from the date of change.
b. It shall be applied retrospectively from the date of change.
c. It shall be applied retroactively from the reasonably possible date.
d. It shall be applied retrospectively as a prior period error.

11. IAS 21 provides that an entity may present its financial statements in any currency even
different from its functional currency. When the company translates its financial statements
from its functional currency to its selected presentation currency, how shall the exchange
differences arising from the translation be recognized?
a. It shall be recognized in profit or loss.
 b. It shall be recognized in other comprehensive income with reclassification adjustment
to profit or loss if realized.
c. It shall be recognized in other comprehensive income without reclassification adjustment
and reclassified directly to retained earnings if realized.
d. It shall be recognized directly to retained earnings.

12. When translating the financial statements of an entity from its functional currency to its
selected presentation currency, which of the following translation measurement is incorrect?
a. Assets and liabilities are translated at the closing rate at the date of statement of financial
position.
b. Income and expenses are translated at (1) exchange rates at the date of the transaction or
(2) Average rate for the period for practicality.
c. Equity accounts other than retained earnings are translated at the date of the transaction
resulting to that equity items.
d. Retained earnings are translated using the average rate during period.

13. When an entity’s functional currency is the currency of a hyperinflationary economy, how
shall the elements of the Financial Statements be translated to presentation currency?
a. All amounts (including assets, liabilities, equity, income and expenses) shall be
translated at the closing rate at the date of most recent statement of financial position.
b. Assets and liabilities shall be translated at closing rate while income and expenses at
average rate while equity at transaction rate.
c. All amounts are translated at average rate.
d. All amounts are translated at historical rate.

14. Which of the following statements concerning exchange differences arising from entity’s net
investment in foreign operation is correct?
a. Exchange differences arising on a monetary item that forms part of a reporting entity’s net
investment in a foreign operation shall be recognized in profit or loss in the separate
financial statement of the reporting entity or the individual financial statements of the
foreign operation, as appropriate.
b. In the consolidated financial statements of the reporting entity which includes that of a
foreign operation which is a subsidiary, the exchange differences shall be recognized
initially in other comprehensive income.
c. On the disposal of foreign operation, the cumulative amount of the exchange differences
relating to foreign operation, recognized in other comprehensive income and accumulated
in separate component of equity shall be reclassified from equity/cumulative OCI to profit
or loss as reclassification adjustment when the gain or loss on disposal is recognized.
d. All of the above.

15. IAS 39 enumerated the following three types of hedging relationships, except
j. Fair value hedge: a hedge of the exposure to changes in fair value of a recognized asset
(AFS Securities) or liability or an unrecognized firm commitment, or an identified portion
of such an asset, liability or firm commitment, that is attributable to a particular risk and
could affect profit or loss.
 k. Cash flow hedge: a hedge of the exposure to variability in cash flows that (1) is attributable
to a particular risk associated with a recognized asset or liability (such as all or some future
interest payments on variable rate debt) or (2) a highly probable forecast transaction and
(2) could affect profit or loss.
l. Hedge of a net investment in foreign operation which is the hedge of the amount of the
reporting entity’s interest in the net assets of the operation.
m. Undesignated hedge such as hedge of foreign currency denominated payable or
receivable.

6. In case of hedging transaction designated as fair value hedge, which of the following
statements is correct?
a. The gain or loss from remeasuring the hedging instrument/derivative designated as fair
value hedge shall be recognized in profit or loss.
b. The gain or loss on the changes in fair value of hedged item/(AFS Securities) attributable
to the hedged risk shall adjust the carrying amount of the hedged item and be recognized
in profit or loss.
c. Both A and B.
d. Neither A nor B.

7. In case of hedging transaction designated as cash flow hedge, which of the following
statements is correct?
a. The portion of the gain or loss on the hedging instrument/derivative designated as cash
flow hedge that is determined to be an effective hedge or the change in intrinsic value of
the derivative designated as cash flow hedge shall be recognized in other comprehensive
income.
b. The ineffective portion of the gain or loss on the hedging instrument/derivative designated
as cash flow hedge or the change in time value of the derivative designated as cash flow
hedge shall be recognized in profit or loss.
c. The cumulative other comprehensive income recognized in equity arising from cumulative
changes in intrinsic value of derivatives designated as cash flow hedge shall be reclassified
from equity/cumulative OCI to profit or loss as a reclassification adjustment in the same
period during which the hedged forecast cash flows affects profit or loss.
d. All of the above.

8. In case of hedging transaction designated as hedge of net investment in a foreign operation,

which of the following statements is correct?
a. The portion of the gain or loss on the hedging instrument/derivative designated as hedge
of net investment in foreign operation that is determined to be an effective hedge shall be
recognized in other comprehensive income.
b. The ineffective portion of the gain or loss on the hedging instrument/derivative designated
as hedge of net investment in foreign shall be recognized in profit or loss.
c. Both A and B.
 d. Neither A nor B

9. In case of hedging transaction considered as “undesignated hedge” such as hedge of foreign

currency denominated accounts payable or foreign currency denominated accounts receivable,
which of the following statements is correct?
a. The exchange differences arising from the changes in measurement of hedged item or
foreign currency denominated accounts payable/receivable shall be recognized in profit or
loss.
b. The exchange differences arising from the changes in measurement of hedging
instruments/derivatives shall be recognized in profit or loss.
c. Both A and B.
d. Neither A nor B.

10. How shall an entity account for hedging transaction classified as hedge of firm commitment?
a. Cash flow hedge only
b. Fair value hedge only
c. Undesignated hedge only
d. IAS 39 gives the entity the option to elect either cash flow hedge or fair value hedge
for hedge of firm commitment.

11. It refers to the degree to which changes in the fair value or cash flows of the hedged item that
are attributable to a hedged risk are offset by changes in the fair value or cash flows of the
hedging instrument.
a. Hedge effectiveness
b. Hedge ineffectiveness
c. Hedge imperfectness
d. Hedge inappropriateness